AS discussions surrounding a possible merger of the National Export-Import Bank of Jamaica (EXIM Bank) and the Development Bank of Jamaica (DBJ) resurface, business groups have renewed calls for Government to abandon the proposal, warning that such a move could undermine specialised financing support for micro, small and medium-sized enterprises (MSMEs).

The Small Business Association of Jamaica (SBAJ), through its president Garnett Reid, reignited the debate late last week following a meeting at which he said the proposed merger was raised as an option still under consideration.

Categorically rejecting the proposal, Reid said the SBAJ, which represents more than 700 members, remains firmly opposed to any move that seeks to close the EXIM Bank or subsume its functions into another institution.

In a media release, the association argued that the two institutions serve distinct but complementary roles in Jamaica’s development financing landscape, offering different products, financing arrangements and areas of support.

Garnett Reid, president of the Small Business Association of Jamaica (SBAJ), is urging the Government to abandon plans to merge EXIM Bank with the Development Bank of Jamaica (DBJ).

To this end, it warned that any plans to merge them could erode specialised services and narrow the financing options available to businesses.

“Rather than considering the closure or merger of EXIM Bank, I am calling on the Government of Jamaica to invest more resources into the institution. The Government should be pumping more money into EXIM Bank so that it can expand its lending capacity, provide greater access to affordable financing and reach more MSMEs across the island. Our small businesses need more financial support at this time — not fewer financing option,” Reid said.

Established in May 1986, the EXIM Bank focuses on trade and business financing, particularly for local exporters, manufacturers and other businesses involved in international trade or export-related activities. Its specialised offerings include letters of credit, bank guarantees and working-capital facilities to support imports, exports, cash-flow management and business expansion.

The DBJ, formed in 2000 through the merger of the Agricultural Credit Bank of Jamaica Limited and the National Development Bank of Jamaica Limited, on the other hand supports broader economic development, with financing directed towards MSME growth, energy, agribusiness and other productive activities. It primarily channels its funding through approved financial institutions (AFIs), including commercial banks and microfinance institutions.

While acknowledging the need to improve operational efficiency, the SBAJ head argued that sharing facilities and other resources would be a more practical alternative to merging.

He also cautioned against pursuing consolidation at a time when small businesses are still grappling with economic pressures and seeking to rebuild and expand their operations post-Hurricane Melissa and other economic shocks.

“At a time when Jamaica’s MSME sector is facing significant economic challenges and businesses are working to recover, expand and become more competitive, we should be strengthening our development financing institutions — not reducing the options available to entrepreneurs,” Reid said.

“Our position is clear: Jamaica needs more accessible and affordable financing options for its small businesses — not fewer. An institution providing financing at interest rates as low as 4.2 per cent is an invaluable resource to the MSME sector and as such… the EXIM Bank must be preserved, adequately funded and strengthened to ensure that businesses can continue to have access to the specialised financial products they need to survive, grow and contribute to national development,” he added.

Meanwhile, president of the Young Entrepreneurs’ Association of Jamaica (YEA) Cordell Williams said any consideration of a merger must be driven primarily by the interests of the businesses the institutions were established to serve.

“While we recognise the potential benefits of greater operational efficiencies, improved coordination, economies of scale and reduced administrative costs… we must also ensure that in pursuing these objectives we do not inadvertently restrict access to financing for the very businesses that will need it most,” she told the Jamaica Observer this week in response to the renewed merger discussions.

Noting that the DBJ primarily provides wholesale financing through AFIs, which subsequently lend to businesses, while the EXIM Bank offers direct financing alongside specialised products and services, Williams said the distinction was particularly important for MSMEs — which often struggle to secure funding through traditional commercial lending channels.

“The Government should consider whether a merger is necessarily the best approach or whether greater collaboration, integration of products and services and streamlined processes could achieve similar efficiencies while preserving the specialised capabilities of both institutions. The entrepreneurial community, including the YEA and other MSME stakeholders, should be meaningfully consulted before any final decisions are made,” Williams said.

She argued that the success of any restructuring should not be measured simply by the consolidation of two institutions, but by whether it improves businesses’ access to capital and puts them in a stronger position to grow, create jobs, compete and export.

“If a merger can deliver these outcomes, then it is certainly worth considering. However, if the result is simply a consolidation of institutions without addressing the fundamental financing challenges facing entrepreneurs, then we would have missed an important opportunity. The YEA’s position is that Jamaica does not simply need fewer development financing institutions; it needs a better development financing system and as such any restructuring must leave entrepreneurs better served — not worse off,” she said.

The Jamaica Manufacturers and Exporters Association which also raised concerns when the merger proposal surfaced in 2022 described it at the time as a “bad move” that would narrow financing channels for businesses in the productive sector.

Past president John Mahfood called for greater clarity on the proposal and a clear explanation of how the merger would benefit local manufacturers — particularly smaller operators. Executive Director Kamesha Blake, who also argued that both institutions were needed, stressed the importance of consulting key players before any final decision is taken.

Talks about merging the entities have been ongoing for several years, but to date no formal announcement has been made. However, stakeholders close to the issue have indicated that recent discussions suggest that the proposal remains active.

When contacted on Monday for an update, an EXIM Bank official referred the Business Observer to its parent ministry, the Ministry of Industry, Investment and Commerce, advising that queries be directed to the minister or permanent secretary, as the bank was not authorised to comment on the matter.

Attempts to reach portfolio minister Aubyn Hill were unsuccessful up to press time. The minster in previous communications has, however, maintained that no official decision has been taken.

Meanwhile, the DBJ in responding to queries from the Business Observer said the proposed merger forms part of an optimisation strategy as government continue efforts to improve efficiencies across the public sector.

“The focus is on leveraging the strengths of both organisations to better serve Jamaica’s wider business community, including MSMEs and improve access to capital solutions,” the institution said.